What is wrong with medical innovation today?

Global spending on medical innovation has increased dramatically from US$ 30 billion in 1986 to $163 billion in 2009. This may seem good news. But a closer look shows a massive disparity in the amount devoted to the health problems of people in the developed world, compared to the amount of funding for R&D targeted at the neglected diseases that affect people in developing countries

The reason for this disparity is that it is precisely in the rich countries where drug companies recoup the largest percentage of their profits. In 2007, the pharmaceutical industry made 87 percent of its global profits in North America, the European Union and Japan.

2. Diseases that take the heaviest toll do not attract the most investment into R&D

Over a thirty year period, between 1975 and 2004, 1,556 new chemical entities were marketed globally. Only 20 of these – a mere 1.3 per cent – were for tropical diseases and tuberculosis, which in 2007 accounted for 12 per cent of the total disease burden.

In 2006, the Treatment Action Group compared the world’s response to tuberculosis, to heart disease and to cancer. Measuring the impact of each disease on the world’s health, and contrasting the number of candidate drugs in development to tackle each disease, they found that tuberculosis was causing thirty times more death and illness for each potential new drug than cancer, and six times more than cardiovascular disease.

A major consequence of this is that pharmaceutical companies will have more interest in developing a drug that they know will be lucrative, even if it doesn’t improve on medications that already exist, rather than one that may represent a greater therapeutic breakthrough but for which there is no commercial market.

This is illustrated in a 2006 WHO report that showed how medical R&D spending in the United States doubled between 1995 and 2002. But, during the same period, the registration of new products declined, as well as the therapeutic significance of products reaching the market. Similarly a breakdown of the 1,035 new drugs approved by the US Food and Drug Administration between 1989 and 2000 revealed that more than three quarters are classed as having no therapeutic benefit over existing products.

In Europe, an assessment of the 3,000 new products approved for the French market between 1981 and 2004 concluded that 68 per cent of them brought ‘nothing new’ compared to previously available preparations.

In Canada, a similar study published in the ‘British Medical Journal’ rated barely five per cent of all newly-patented drugs approved by the Canadian Patented Medicines Prices Review Board as ‘breakthrough’. Alarmingly, drugs classified as ‘me-too’, or having no added therapeutic benefit, were responsible for 80 per cent of the soaring rise in prescription costs witnessed in the country. This provides a telling illustration of the waste in a system that rewards innovations that present little or no therapeutic gain.

A recent report by the Treatment Action Group shows that while investment in TB research has increased recently after decades of stagnation - up by 26 percent since 2008 – the US$ 619 million invested in 2009 represents only one-third of the $2 billion that it’s calculated is needed annually to develop new tools to fight TB effectively.
Governments are not pulling their weight. In a 2005 study, the London School of Economics showed how governments were lagging behind philanthropic organisations – such as the Bill & Melinda Gates Foundation, or even Médecins Sans Frontières – in providing financial support to product development partnerships (PDPs) that bring together public and private sectors for medical innovation. The report estimated that an additional US$ 200 million per year was needed for PDPs to ensure delivery of the new drugs in their pipelines.

An example of this chronic underfunding for research by governments is again exemplified by TB. In 2008 – 2009, the Access Campaign carried out a number of surveys into European investment into TB research. The results showed that European Union members are not contributing their fair share towards TB Research and Development. Under the ‘fair share’ methodology, for instance, Europe was found to be spending only one third as much on TB research and development as the US public sector. Given that the European GDP is over one fifth bigger higher than the USA , there is no basis for this huge discrepancy. This pattern of systemic underfunding has led directly to a situation where our field staff don’t have adequate medicines to treat patients with drug-resistant TB effectively.

5. This happens because in today’s system, medical innovation is paid for by charging higher prices for medicines

Adapted, effective and affordable medical tools for diseases that affect the poor are lacking because of one simple reason: the current way the development of health products are financed.

Today, the R&D system relies - with huge detrimental consequences - on companies recouping their R&D investments through charging high prices, and protecting that price through patent monopolies. Not only does this mean that some drugs remain completely out of reach for many patients, it also means that diseases like TB or paediatric HIV that mostly affect the poor don’t get anywhere near the attention and investment into research as diseases that have bigger, more lucrative markets.

Change will only happen once new financing mechanisms are set up that steer R&D towards priority health needs and ensure that the price of newly developed medical tools is de-linked from the costs of R&D.